have someone in the car watching the gauge while you keep your hand on the upper hose, when the thermostat opens it will get pretty warm quick so give a signal and the other person read the gauge - your goal here is to see if your gauge shows 260 when the thermostat opens, if that's the case then it's either the thermostat or the gauge/sender. A more unconventional way is to leave the cap out (when the coolant is cold, don't take it off when hot - i'm sure you know but i just mentioned it to be safe) - if it starts boiling before the thermostat opens then that's the problem, if not then it's your gauge or sender.